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tv   Nightly Business Report  PBS  April 8, 2013 4:30pm-5:00pm PDT

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this is "nightly business report," brought to you by the street.com, extractive financial multimedia tools for an ever changing financial world. our dividend stock advisory generates income. low money helps you think through ideas for investing and trading stocks. action alerts plus is a charitable portfolio. online, mobile, social media. we are the street.com. j.c. penney out.
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a big shake-up happening today. >> we lk with the comny's ceo about the numbers and the outlook. >> building your nest egg. new strategies to protect your retirement savings. >> all that and more coming up on "nightly business report." >> good evening and welcome to our public television, viewers. a big management shake-up late in the day. >> right after the market closed, the ceo, ron johnson is out after just a year and a half in the job. now mike ullman has been named interim ceo. j.c. penney's sales dropped 25% in johnson's first year at the helm, and then during his tenure the stock tumbled 50%. >> joining us now with more on what happened and what's next
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for the company, our courtney reagan. >> good evening to you both, tyler and susi i'm actually standing outside the new york courthouse because earlier today the trial resumed between macy's martha stewart. johnson's turn around plan just hasn't taken hold. sales down precipitously and now it appears that johnson is stepping down. that is the wording that was used in the press release. and interim ceo will be mike ullman. he was the ceo before ron johnson. during the time that he was ceo, the stock price fell 17% and earnings were relatively flat. as far as where the company goes from here, a lot of questions still unanswered at this hour as to what this interim ceo will
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change, if anything, as they make the transition and search for a prominent replacement. >> so there's no likelihood that mr. ullman will be the permanent successor to mr. johnson whatsoever? >> at this point we don't know. it is possible. however, we know that the board moved him out and moved him in. it's possible he could stay, but at this point j.c. penney is using the words interim ceo. it has happened in the past that these interims become permanent, but as with best buy, the new interim ceo did not become the permanent. >> courtney, i think the $1 million question here is, is j.c. penney fixable, no matter who's the ceo? >> i think it is fixable. i think the big question is how and how long it will take. they are in the middle of a very big turnaround plan. they've torn out the guts of the old j.c. penney and they're
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building a brand-new model. so what do they do now? do they stop? do they do something new? a number of analysts think it is fixable. telling cnbc's scott wopner that he believes it is fixable. i don't know what's going to happen. th is late-breaking news and we're still asking a lot of questions. >> courtney reagan, thanks very much. >> also in the news tonight, a better than expected earnings from alcoa. the aluminum giant is the first dow component to turn in quarterly results. here are the numbers. alcoa earned 11 cents a share. that was 3 cents more than estimates. but revenues came in below expectations, down 3% to $5.8 billion. now, alcoalso sd it expects
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global demand for aluminum to rise by 7% this year and sales of aluminum products to the auto and aerospace industries did very, very well. when i talked to the ceo a short while, i asked him about the outlook for those sectors for the rest of this year. >> we're seeing that there's very strong demand in some of the end markets we cater to. when we look at aero space, aircraft is probabl mor 12 to 9%, the growth rate. there's an eight-year backlog of planes. so it's a very stable market anding growing nicely. you can see growth in business jets and to regional jets. automotive, automotive in the u.s., which is particularly important for us. it's continuing to grow very, very nicely. we're seeing that it's coming to levels of pre-crisis times. and at the same time we also see
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that the average age is still higher than it used tbe. sohereontinues to be demand. and what makes me particularly excited is that there's the stronger consumer drive for lightweight and for better gasoline efficiency. that's driving very, very strongly the aluminum demand on top of it. and building infrastructure large market, very important for the u.s. economy, is coming back, finally is coming back and now i guess everybody sees this. >> in the last couple of days, there have been new worries about the strength of the u.s. recovery. so from your perspective is the onomslowing down how the u.s. economy really doing? >> u.s. economy i think is not slowing down. it continues to grow. what you see, there is a counterforce coming in through sequestration. so some of the public spending goes down. but at the same time you see that the businesses are growing.
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i believe that's a good thing to have and a good structure for the economy in the u.s. so i continue to be optimistic. while not seeing a high-growth environment like the onee woulbe seeg in chi, bui don't think anybody can expect for a mature economy like the u.s. one. >> given your optimism, will you be hiring this year? >> actually, the interesting thing is, we are around 61,000 employees worldwide. and there are some moves in there, and interestingly, we see that the u.s. has been gaining on the employment side. and that's very much a reflection of what happens in our portfolio. the more we add value, the more you see aero space as well as automotive growing. and on top of that, with the very attractive lower engineer prices now, that also particularly helps. >> one thing that's not working
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in your favor are aluminum prices, which are down sharply over the last couple of years. what has to happen for those prices to go up? and is part of your strategy to cut back on aluminum production? >> well, our strategy is very chloral focused to be independent of what we can control, so let's focus on the things we can control. the things we can contl in or upstream business is to come down in the cost curve. to no matter where the market is going to be, we are going to be profitable, and you see that reflected in this quarter. metal prices are down and you see a remarkable performance from our upstream business. >> tell me about china. from the customers you're dealing with there, are they ordering more or less? >> people are ordering more. we project 11% demand growth on aluminum this year in china. on wall street today, strokz closed at the highs for the session as investors looked ahead to those results from alcoa and earnings from several
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our blue chips. the aluminum giant was one of the biggest gainers in the dow today, rising nearly 2% as of the close. for a good part today, strokz traded in the red, still reeling from those disappointing job numbers on friday. in the end the dow closed higher by 48 points, nasdaq up about 18 and the s&p 500 gained ten points. the earning season begins, the consensus is tepid. here's the chief investment strategist. >> to say you have 2.5 public defender expectation growth is bullish is really hard to make the case. if you look at how you even got there, it's buybacks and losses that made the prior year look
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even worse. you're talking about zero growth this quarter. >> what do you see down for the rest of the year? >> our full-year expectations, you have 3.5 to 4% earnings growth for the whole year, roughly in line with what other strategists are thinking. analysts are always a little bit too optimistic on the outquarters so i expect their estimates to come in as the year progressing along. >> if that's the level of earnings growth you're looking forward to, what's the level of stock price grth? >> why am i not optimistic right now about the market, you have a market up almost 15% since mid-november yet looking at earnings growth in the low to mid single digits, a really big disconnect. so i think unless you get better earnings than are being forecasted now, very hard for this rally to continue. >> why are stocks up as they are? >> printing press is running, and also i think that at the end
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of the year, we got over the fiscal cliff, we got over the debt ceiling issue and the world continued to opate, a people are feeling pretty good about that. but short of that and the money printing, there's really not a lot of great news on the earnings front. >> are you looking for a sizable correction? if you say the stock rally can't continue or go much higher, are you looking for a treading water kind of scenario? >> it's hard to know whether this is a fizzle or pullback, but the more important thing is if you have 3, 4% earnings growth, i don't see how you could get the market to continue the pace of the run you've had so far. and if you look at what's running it's the defensive -- >> healthcare. >> the cyclical things, the tech sector, energy sector are expected to havier over year
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decline in earnings. >> make me some money here. from this point forward to the end of the year, what sector do you think can outforeman what you seem to be saying is going to be a relatively flattish mark? >> i like the consumer sectors. i think it's going to be a little bit of a rough earning season because of this tax increase that we had. but i think the consumer holds up better than people think. i also like healthcare, especially in the back half of the year as we go into obamacare, i think the stocks are going to rally. >> thank you. turning now to market focus, we begin with general electric and a $3 billion acquisition. the purchase is a key part of the company's focus on the shale fields of north dakota and texas.
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other oil field stocks moved higher in sympathy. avon says it will cut 400 jobs. that's about 1% of its global work force, part of its effort to slim down, which includes closing of some operations in the middle east, africa and eupe. shares of avon rose to $20 and change. stocks fell after a jp morgan downgraded shared saying he expects the company to reduce its profit forecast. the stock as run up 30% since june and it finished today at $81.11. shares have delta rose nearly 4%. jet blue share ended higher. ev unite airlines, which was dead last in a recent government
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survey on quality and airline performance saw shares ride. you might think the words airline and quality don't often belong in the same sentence but the department of transportation is out with its annual rankings of the largest carriers. some of the results might surprise you. >> reporter: if you've flown lately, you know the drill. long lines and customer service that is often lacking. >> it's not nearly as much fun as it used to be. >> reporter: the latest report on airline quality confirms passengers are losing patience. last year complaint to the federal government jumped 20%. two negatives overshadowing the fact airlines have done a slightly better job arriving on time. >> we have asked the o.t.ow
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manyomplnts do you think are out there that you never hear about? and they said chances are there's at least four to five times the number of complaints that they hear about. and last year they heard of just right at 11,400 complaints. >> reporter: complaints by travelers soared in part because of mergers. also a noticeable increase in passengers being bumped from oversold flights. as airlines have shifted to smaller planes, it's left them fewer empty seats and less flexibility for rebooking bumped passengers. >> airlines really have to figure out how to manage their business now with the smaller capacity that's in the marketplace. to us as the traveling public to get us where we are going reasonably. >> reporter: so which airline did the best job last year? >> low cost carriers, jet blue,
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and air tran led the list. the worst included american and united. unfortunately for thousands who are flying, the experience will not be improving anytime soon. airlines are reluctant to add new flights or bigger planes, so the flights we see in the sky will be packed. for "nightly business report," phil lebeau, alabama. how do you feel about your trip to ireland later this week? >> i'm going to be going on united so they've got four days to get it together. i think one of the things phil said to me offline earlier was that one of the things that crept up with united was that last year when they integrated their systems with continental, there were major snafus and that got a lot of people angry. coming up, tax changes are coming in.
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they could impact your nest egg. new retirement strategies to consider. first a look at how international markets fared today. if it's monday, it must be belgium. jack lew is on his first trip to europe, meeting with the leader of the european union in brussels. lew says that struggling
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european countries should try to ease up on austerity measures and adopt instead more growth-friendly economic policies. the white house is preparing to release its 2014 budget proposal with thousands of copies coming off the printing press today. the republican controlled house passed a different version. last week the president offered to consider reductions in entitlement programs as part of a long-term budget deal. the senate got back to work today after a two-week recess and it confirmed mary jo white as america at top cop. white received a lot of bipartisan support in the senate thanks to years in esenate in new rk. one week from today, federal taxes are due, so chances are you've already filed this year's
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forms. but today we kick off a week-long series of tax tips to consider ahead of next year's filings. some big changes in tax laws going into effect in 2013 might force many top earners to consider making significant changes right now to their retirement savings account. >> reporter: attorney doug branley usually gets a tax refund each spring but he's not unting on one this year or in the future. >> as my tax burden increases, i'm paying more in taxes, i'm not getting tax refunds, and we are having to plan for that. >> reporter: top earners will take a big hit on earned and investment income. for couples with $450,000, increases in medicare surtax will result in a hit of nearly 42% on earned income in 2013, a
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more than 5% increase or lt year. last taxes in dividends and long-term captain gains have surged to nearly 24% for top earners. facing a potential tax hit like this is forcing households like branley's to make some changes. >> we have already done as a family a lot of planning in anticipation of the fact my income will be lower next we're. >> reporter: big changes for portfolio planning may lie head to too. >> maybe buying some stocks for growth purposes that aren't paying dividends that maybe give you the same result in the end but have a little less tax implication. two, make sure that after you look at your nonqualified money you go to your tax deductible
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money, your 401(k)s, 403(b)s, iras and make sure you're maximizing those opportunities. >> reporter: contributing the maximum to a 401(k) will reduce your taxable income. convert a regular ira to a roth ira, you'll be taxed but you can take the money out tax-free after 59 1/2. >> with the tax increase coming up, we're going to be putting more and more money into my rost ira and my traditional ira. >> for ma, a variednvesent strategy is an imperative. >> we're going to back to managing investments, and those folks who manage it the best will get to the finish line first. >> reporter: for "nightly business report," i'm sharon epperson. >> our series on tax tips will
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continue tomorrow with new ways to save for your retirement. if you've got questions, send them to us at nbr mail at cnbc.com. >> still ahead, a powerball fever hits the golden state. is it the answer to california's financial problems? first let's take a look at how commodities, treasuries and currencies did today.ys
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many california residents are hoping to hit the jackpot so that'll be set for retirement. starting today, powerball lottery tickets went on sale in california. 34th state to join the nationwide game. our reporter tells us how much californians hope to hit. >> reporter: california is the 43rd state to jump on the powerball bandwagon. tickets are $2 instead of $1 which means bigger jackpots than the state's current gains. the chances of winning the top prize, less than 1 in 175 million. but that doesn't stop the stream of wanna be winners. >> i could be the one. >> figured i could take my chances today. it's only a few dollars and i can make millions.
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>> reporter: the only sure woirn will be the state of california. projected net increase of $100 million in sales. 40% of that revenue will go to california's schools. that's a drop in the bucket considering the state spends $68 billion annually on education. but there are other winners. those selling these tickets see a huge boost in traffic. >> all of our shopper studies show that lottery players buy more goods. i think there's a tremendous benefit for the retailers. >> reporter: california director o'neil projecting it will boost sales by 25%, which could lead to a $1 billion jackpot in the next few years.
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former secretary of state condoleezza rice took some swings at augusta. she also put on the private club's traditional green jacket as she talked with some fellow members. last august rice became one of the first two female members at augusta national. finally, the world is mourning tonight the passing of britain's iron lady. former prime minister margaret thatcher passed away today. shwas a strong proponent of free markets. she revitalized the british economy and radically changed the role of government. she developed a close relationship with u.s. president ronald reagan during the cold war and backed president george bush during the 1991 gulf war. today president obama said america has lost a true friend. there are still a lot of questions about her legacy. she's being criticized for a lot
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of decisions she made. >> many controversial moves during her time but when asked why she was named the iron lady, she said the soviets who gave that name were right. >> have a great evening, everyone. we'll see all of you right back here tomorrow.
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